NATIONAL HARBOR, Md.--The ARPA-E Summit opens this morning with seemingly dual purposes: toinspire scientists to invent and to convince Congress of the energy agency's own worth.

The conference is a showcase for cutting-edge energy research and development and a magnet for investors and politicians eager to tout the benefits of investing in developing clean-energy technologies. Keynoters include Energy Secretary Steven Chu, former California governor Arnold Schwarzenegger, and Navy Secretary Raymond Mabus. Also speaking will be some Republican and Democrat members of Congress, leaders of big businesses, and representatives of several fledging technology companies.

Secretary Steven Chu at last year&39's ARPA-E Summit.

After last year's inaugural event and nearly two years into the overall the Advanced Research Projects Agency-Energy (ARPA-E) program at the Department of Energy, director Arun Majumdar and other DOE officials can point to progress in some potentially significant technologies and follow-up private sector investment. ARPA-E was created in 2007 to pursue high-risk, high-reward technologies but was not funded until April 2009 with $400 million for two years through the stimulus act.

But in the debate over federal spending, there is concern that ARPA-E's funding may be cut. Congress is currently debating a budget to keep the federal government operating which, according to one report, would dramatically cut ARPA-E.

The White House, meanwhile, has submitted a budget that seeks to more than double the ARPA-E budget, part of a strategy to invest in innovation to spur the economy and stimulate export of U.S.-made goods.

Entrepreneurs at the ARPA-E Summit said yesterday that the program has largely functioned as it should, giving them the funding--usually in grants sized under $10 million--to pursue longer-term projects. They also said the program is generally well-administered in that it sets specific, market-based technical targets. If they are not met, the grant is cut off.

Venture capitalists cannot invest in science that is too speculative or will take more than a few years to prove out, which his where research-oriented grants can fill a gap, said Anthony Atti, the CEO of Phononic Devices, which is making thermoelectric chips that can be used as better heat sinks for computers or generate electricity from low-grade waste heat. After using a $2 million grant from ARPA-E to reach technical milestones for that program, the company raised an additional $10 million from venture capitalists.

"I'm a free-market guy but the reality is if you want to be serious in the energy science and technology space--which we're still debating as a country--then you need research and development," Atti said.

Venture capitalists are willing to take on the risk of the management team's ability to execute and whether a market will materialize for products. But they cannot handle those risks on top of science risk, Atti said. Federal funding can "derisk the science."

Enough blue-sky research One of the technologies that is a clear potential breakthrough originated at the Massachusetts Institute of Technology where a professor developed a relatively cheap catalyst for getting hydrogen fuel from water. The company, Sun Catalytix, was funded by venture investors and then received a $4 million grant from ARPA-E to pursue a longer-range product that would convert hydrogen from a solar cell, which it is displaying here.

That grant played an "incredibly vital" role in the company so far because it allowed the company to pursue a potential breakthrough without the commercial pressure of delivering a product within a year or two, said Mark Barnett, the vice president of business development and general counsel.

"We're tackling a huge problem with a huge potential impact and material development is always a multi-year process," he said.

David Mather, the president of MTPV, which did not receive a grant, said the way ARPA-E is structured doesn't allow it to pursue "blue sky" research the way that DARPA did. The decades-old Defense Advanced Research Program Agency, the model for ARPA-E, yielded many technologies, including the Internet and GPS.

ARPA-E grant solicitations are very "descriptive" in that they fall into well understood energy categories, such as wind, solar, and algae. But MTPV's technology, which converts waste heat to electricity, doesn't fall into any of those categories.

Makani Power CEO Corwin Hardham also said that ARPA-E's grant allowed it to pursue science that venture capitalists would not feel comfortable funding because of their shorter time horizons. Employees give regular updates to program administrators on its self-driven, wind-harvesting "wing," which is designed to gather wind energy at altitudes higher than traditional turbines.

"You can forget about our energy problems or our climate problems. But we should invest in energy technologies for economic reasons,"he said. "America's advantage has always been technology but we're losing it very quickly."